If you have been deducting mortgage interest on your past taxes, you home is probably considered real estate. But, there is an exemption of $250,000 for you and another for your wife if you have lived there at least two years. I find it hard to believe you would owe any taxes on a trailer. If you haven't been deducting mortgage interest, who knows you have it anyway?

If the seller paid $10,000 of your closing costs, then your 'real' purchase costs were $341,000 - $10,000 plus your closing costs excluding down payment and pre-paids such as property taxes. In case there's some confusion, 'Closing Costs' are fees and expenses related to the purchase -- title search, survey, etc. These are completely different from a 'Down Payment' which is an investment directly into your home equity, or pre-paid expenses where the title company collects your property taxes up front. Even though you fork over your down payment and pre-paids at closing, the numbers aren't related. Definitely read the IRS publication and get help with it if you need to.

The basic answer is this: Assuming this is your main home, you can exclude up to 250k for a single taxpayer (or 500k for married filing joint) assuming you have own the property for more than 2 years and have lived in it claiming it as your main residency. Since you have live in it less than 2 years you will need to calculate your gain on the sale of your property: Original Cost of Home (Basis) Plus: All Realtor, FSBO, closing fees, etc to buy the home that you paid Plus: All Realtor, FSBO, closing fees, etc to sell the home that you paid Plus: Cost of all improvements made to the home. Minus: Total deprecation taken on the home (only if you depreciated your home for a business) All of this will equal your new basis in the home. Then take your sale price of your home minus your new basis to find out if you have any gain you will need to report on you Schedule D. Internal Revenue Service Circular 230 Disclosure: To ensure compliance with requirements imposed by the Internal Revenue Service, we must inform you that the advice we provide in this correspondence is not intended or written to be used, and cannot be used, by you or any other person or entity for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or any applicable state or local tax law, or for the purpose of promoting, marketing, or recommending any tax-related matters addressed within to another party. You are not prohibited from sharing this advice with third parties. However, the third parties should seek their own advice based on their particular facts and circumstances from an independent tax advisor.

The money is yours tax-free to do as you wish. You never have to use it to buy another house. You are thinking of an earlier housing law that was changed in 1998 I believe that required homeowners to reinvest their profits within two years in order to defer capital gains taxes. Under the prior law, you had to wait until you were 55 in order to acquire the money tax free (and could only do so once in your life).